Brazilian financial newspaper Valor Econômico revealed details of an alleged corruption amnesty currently being discussed by lawmakers who have been accused of alleged involvement in the graft scandal at state oil firm Petrobras.
Operation “Car Wash,” the gargantuan investigation into endemic corruption in Brazil, has jailed scores of elite politicians and business leaders and called into doubt a long-accepted phrase in the country: “rouba mas faz” (“he steals but he gets things done”) as citizens become increasingly outraged at the rampant graft.
As state prosecutors begin to close in on the inner workings of the scandal’s massive kickbacks and illegal campaign donations — thanks to a string of plea-bargain testimonies that illustrate the extent to which the graft has become institutionalized — those who have already been accused of, or linked to, that corruption are apparently pushing the amnesty to exchange information on the crimes for lesser sentences — or none at all.
As the Senate voted to suspend President Dilma Rousseff over alleged illegal fiscal manipulations on May 12 pending an impeachment trial, a shocking 58 percent of the chamber was at that moment under investigation for corruption.
Indeed, the man who led the impeachment charge, carrying it from a long-shot bid to reality, former Lower House speaker Eduardo Cunha, has since been dethroned by the House’s Ethics Committee over the numerous graft accusations surrounding him and for having been caught lying over millions of dollars stashed in secret Swiss bank accounts.
The Valor article written by reporter Maria Cristina Fernandes tells of the advance “behind the scenes of Congress” of an amnesty for some of the politicians who have had their names involved in Operation “Car Wash.”
The proposal, the daily says, was Cunha’s creation, and has gained momentum since excerpts of the negotiations between prosecutors and the disgraced head of the country’s largest construction conglomerate, Marcelo Odebrecht, have been revealed in the media suggesting his plea-bargain testimony will implicate many more of the country’s top politicians.
“A group of lawyers with clients in ‘Car Wash’ have begun discussing the draft of a proposal that could be inserted into the discussions over ten anti-corruption measures that are currently being passed in Congress, that may appear as part of the political reform that will be on the agenda after the municipal elections,” the article stated.
Another part of the proposal is to create a distinction between slush-fund payments and bribery. The legislation already distinguishes them but it exists in a gray area that “Car Wash” prosecutors put under the same charge.
Legislators would prefer the two crimes to be distinguished as slush-fund payments to political campaigns, a crime which many of the politicians have been accused of and carries a much lesser sentence.
Petrobras Profit Tumbles
Brazil’s Petrobras reported second-quarter profit that fell by nearly a third from a year earlier, missing expectations as oil prices fell and it took charges for layoffs and the impairment of a refinery.
Petrobras said net income fell 30% to 370 million reais (US$ 118 million) in the three months ended June 30 compared with a profit of 531 million reais a year earlier.
Last year’s profit was one of the most anemic quarterly results in the company’s recent history. The second-quarter 2016 profit comes after a 1.25 billion reais loss in the first quarter of this year.
Part of the problem for analysts trying to chart the company’s progress is Petrobras’ huge debt, Chief Financial Officer Ivan Monteiro told reporters. This requires the company to make quick changes to preserve enough cash to pay its obligations.
While total debt has eased 2% since the end of 2015, at US$ 124 billion it is still the largest in the oil industry.
“From our point of view the company is becoming more predictable,” Monteiro said. “Clearly we’re still facing difficulty because the company’s debt level is still very high … still at a level where we are required to maintain a very high level of liquidity.”
After a 26% decline in the average price of benchmark Brent crude oil LCOc1 compared with a year earlier, Petrobras net sales, or total sales minus sales taxes fell 11% from a year earlier to 71.3 billion reais.
The 1.21 billion reais cost of a voluntary dismissal program and 1.12 billion reais impairment charges for the Comperj refinery, whose construction was halted last year after eating up US$ 13.5 billion of investment, kept costs high even as revenue fell.
As a result, operating profit fell 25% to 7.18 billion reais. If a scaled back Comperj opens as now planned in 2023, it will be more than a decade late and nearly triple its original US$ 5.2 billion budget.
Contract fixing, bribery and political kickbacks from the refinery are part of a giant corruption scandal that implicated, and resulted in jail terms for a number of its former senior executives and contractors.
Earnings before interest, taxes, depreciation and amortization, or EBITDA, a measure of a company’s ability to generate cash from operations, was little changed rising 2.8% to 20.3 billion reais.
In related news, Petrobras reported that oil production in Brazil fell to 2.2 million barrels per day in July, a 0.36% drop from June. The company produced a total of 2.89 million barrels of oil equivalent (boe) in July from its activities in Brazil and abroad, slightly below the 2.9 million boe produced in June.